Customers rule:
Logistics development puts pressure on short-sea ro-ro

	Short-sea ro-ro is probably more tangible affected by logistics demands than any other kind of shipping.

Logistics has become a concept on every mans tongue, or even an expression a la mode. However, in reality it is not only a concept, but also a driving force behind rising demands on transport services.

Manufacturers try to optimise their resources by cutting the lead-times, minimising the time-windows for deliveries and lowering the safety-stock levels. Such actions call for fast and reliable transport services in every link of the chain, and the acceptance for delays or any other kind of failures is none.
The most extreme examples of how tight the schedules can be are likely to be found in the car industry. For instance, truck-drivers performing road transportation for Volvo Logistics have to report every unexpected delay exceeding 15 minutes, in order to avoid downstream disturbances in the supply chain. In this business environment, transport providers in all transport modes are trying to develop their services to be as competitive as possible.

More affected
When it comes to sea-borne transportation, short-sea ro-ro is probably more tangible affected by logistics demands than other kinds of shipping. Often working as integrated parts of industrial supply-chains, ro-ro transportation plays a significant role when it comes to production planning.
Several important ro-ro routes are operated in the northern and western Europe. Some of them to be mentioned are the Channel-crossing routes and the routes connecting the Scandinavian countries with the rest of Europe. Transport requirements on such routes not only concern the sea-voyage itself, but also other kinds of service arrangements surrounding the transport.
For the actors on the ro-ro market, it is a great challenge not only to keep this key position in the supply chain, but to strengthen it. If not being able to offer the customers what they demand, the risk to be stucked in the inner lane of the transport race is obvious.
In a transport perspective, the services included in ro-ro transportation are quite limited. As a matter of fact, there is some criticism among the industrial actors saying that shipowners are taking a much too limited responsibility concerning the movement of goods. They mean that instead of focusing on taking the vessel from quay to quay, shipowners should aim at making the transport as a whole more efficient. Taking the forwarders as an example, they have developed from being pure intermediaries towards becoming third-part logistics providers, offering their customers a number of services.
As a hypothetical approach, it is possible for shipowners to go in the same direction, but of course it doesn’t mean that shipowners should become forwarders. Instead, it only underlines the possibility for shipowners to widen their business to include not only traditional shipping services, but also transport services of a more general kind. In this context, shipowner is synonymous to charterer.
In a recent study, nine large ro-ro-customers were interviewed and the demand for extra services in connection to the sea-voyage was discussed. The mix of ro-ro-customers is to some extent segmented, and could be divided into three main categories: 3PL-actors (third-part logistics providers), trailer-operators and industrial customers.

Three different levels
The idea of offering those customers extra services is simply to add an extra value to them. Thus, such services could be defined as value-adding services. A possible widening of the ro-ro-business to include value-adding services could be described in three different levels, each of them representing a certain width of the service package.
Level 1: Ro-ro service. Level 1 focus on making the actual ro-ro operations more efficient, mainly by adding extra services supporting the cargo handling. The concept is quite narrow, but somehow wider than common ro-ro services of today.
Level 2: Transport service. By offering the customers a complete transport service, level 2 suggests shipowners to take a larger responsibility concerning the transport. In this level, the ro-ro operator is supposed to widen his service package to also include transport services of a more general kind. As a consequence, the transhipment between road and sea could be made more efficient, and it might also lead to a better utilisation of the time the cargo spend in port.
Level 3: Logistics service. Level 3 includes not only ro-ro and transport-services, but also a product dimension. The logistics service represents the most extreme form of service-width assuming the shipowner to offer the customers product-related services as well, dedicated mainly for industrial customers.

Inform customers in advance
Extra services suggested to be added to the ro-ro service are very much related to information. It includes for example the ability to inform the customer in advance when his goods will be available in the port of destination. Such information should be very precise and as a desired accuracy, 15–30 minutes is mentioned.
Another important issue is the information in case of losses. Modern technique makes it possible to send instant pictures of cargo-damages to the customers, no matter if they occur in port or at sea. Detailed pictures would certainly support customers in taking fast and right decisions concerning further actions. Information could also be of a more administrative kind. For example, electronic invoices sent direct to customers accounting system for automatic handling are already in use, but still unusual in ro-ro shipping.
Over and above the ro-ro service, a complete transport service includes transport-focused activities of a more general kind. Such activities could be carried out in terminals located near the port and might include cross-docking operations, consolidation of goods and co-ordination of movements.
It could also be simpler activities not requiring terminals, for example trailer-washing facilities near the port and inspection of cargo-securing inside trailers, ensuring that the lashings cope with local road-regulations.
The logistics service assumes a significant widening of the business to include not only transport arrangements, but also some goods-handling. Such services could be carried out in transport terminals (as described above) and might consist of for example labelling, packaging, sequencing, or even customising of products.
Hypothetically, product-activities could also be carried out on board ro-ro-vessels operated in safe waters, specially adopted to fit for certain production-processes.
In this kind of parallel processes, product-movement and product-handling are carried out simultaneously. Obviously, this concept hides an opportunity for manufacturers to cut their lead-times in production even more. Another product-related service concerns the transport-arrangements of private cars.
From the manufacturers point of view, having own staff controlling the flow of goods in the port is not an ideal solution, but still it is the ordinary routine of today.

Supporting ro-ro operations
According to the study, what the customers really ask for is extra services supporting the ro-ro operations.
There is also an interest in transport services, although the interest concerning terminal activities is somehow vague. The demand concerning logistics services is a little bit more difficult to analyse. The respondents don’t close the door for such solutions, but still conclude that their present business doesn’t suit for this kind of arrangements.
Furthermore, the study shows that the customers are not willing to pay for extra services supporting the ro-ro operations, i.e. the services they demand. On the other hand, they claim that they are willing to pay for wider services, as long as the price is competitive. Regardless of if there is an interest or not, it could be questioned if it is suitable at all for a ro-ro operator to offer wider services. Suddenly, he will act in the same business segment as his customers and as a consequence, they will become competitors.

Not reason enough
The fear for loosing customers is also one main reason for shipowners to keep focus on services supporting sea-born transportation only.
Somehow surprisingly, the study show that the customers don’t regard a service-widening as reason enough to change transport provider. Instead, several of them conclude that they might draw benefit from such services themselves, as long as the shipowners’ don’t steal customers direct from 3PL-actors and trailer-operators.
By some, discussions concerning wider services might appear extreme, but nevertheless they are relevant. At least, the demand for more sophisticated ro-ro services should be taken seriously, and the ro-ro operations should be developed according to ro-ro customer’s desires.
It is also important to state that what is an interest today might be a demand tomorrow. Therefore, the interest for general transport services should also be regarded, especially those that are easy to realise. Concerning logistics services, they appear to be far away from ro-ro business at the first glance.
However, perhaps those services hide the greatest opportunities for market growth in the future. Tying up large goods-flows by signing agreements direct with industrial actors is certainly a challenge to be taken seriously.
In reality, shipowners offering all kind of services might be a utopia. More important to state is simply the fact that future transport demands call for more sophisticated solutions, but the specifications might vary from customer to customer. Therefore, shipowners should be prepared to offer each ro-ro-customer tailor-made solutions built on individual desires.

Tailor-made solution
The meaning of tailor-made solutions isn’t necessarily the same as complex, integrated solutions dedicated to certain goods-flows. Instead, a tailor-made solution could be much simpler than that, built on for example a sophisticated ro-ro service added with some washing facilities and some cargo-securing service.
For once, flexibility might be the right word to use when describing the future business in short-sea ro-ro. In fact, what the customers really wants is not only an efficient sea-link, but an efficient transport-channel reaching all the way from sender to receiver.
//Björn Garberg

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